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Home My Public Portal About01-25-21 Agenda Work Session Interim Town Clerk and Human Resources Technician Sarah Kimrey 101 E. Orange St., PO Box 429, Hillsborough, NC 27278 919-296-9443 | sarah.kimrey@hillsboroughnc.gov www.hillsboroughnc.gov | @HillsboroughGov Board of Commissioners Agenda | 1 of 1 Agenda Board of Commissioners Work Session 7 p.m. Jan. 25, 2021 Town of Hillsborough YouTube channel Due to current public health concerns, the Board of Commissioners is conducting this work session remotely using Zoom. The public can view and listen to the meeting via live streaming video on the town’s YouTube channel. Compliance with the American with Disabilities Act interpreter services and/or special sound equipment is available on request. If you are disabled and need assistance with reasonable accommodations, call the Town Clerk’s Office at 919-296-9443. Please use the bookmark feature to navigate and view the item attachments. 1. Opening of the work session 2. Agenda changes and approval 3. Items for decision ― consent agenda A. Miscellaneous budget amendments and transfers B. Proposed contract for year-end audit services in connection with the fiscal year ended June 30, 2021 4. In-depth discussion and topics FY2022-24 Budget Check-In 5. Other business 6. Committee updates and reports 7. Adjournment Board of Commissioners Agenda Abstract Form Meeting Date: Jan. 25, 2021 Department: Administration - Budget Public Hearing: Yes No Date of Public Hearing: __________________________ For Clerk’s Use Only AGENDA ITEM # 3.A Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Emily Bradford, Budget Director ITEM TO BE CONSIDERED Subject: Miscellaneous budget amendments and transfers Attachment(s): 1. Description and explanation for budget amendments and transfers Brief Summary: To adjust budgeted revenues and expenditures, where needed, due to changes that have occurred since budget adoption. Action Requested: Consider approving budget amendments and transfers. ISSUE OVERVIEW Background Information & Issue Summary: N/A Financial Impacts: As indicated by each budget amendment. Staff Recommendations/Comments: To approve the attached list of budget amendments. BUDGET CHANGES REPORT TOWN OF HILLSBOROUGH FY 2020-2021 DATES: 01/25/2021 TO 01/25/2021 REFERENCE NUMBER DATE BUDGET CHANGE BUDGET ORIGINAL BUDGET AMENDEDCHANGE USER 10-00-3100-3101-216 2016 TAX LEVY 01/25/2021 0.00 776.00Adj to actual 20464 5,800.00EBRADFORD 10-00-3100-3101-217 2017 TAX LEVY 01/25/2021 0.00 2.00Adj to actual 20465 13,313.00EBRADFORD 10-00-3100-3101-218 2018 TAX LEVY 01/25/2021 0.00 461.00Adj to actual 20466 4,545.00EBRADFORD 10-00-3100-3101-219 2019 TAX LEVY 01/25/2021 35,000.00 4,340.00Adj to actual 20467 27,168.00EBRADFORD 10-00-3110-3110-008 SOLID WASTE FEES 01/25/2021 0.00 60.00Adj to actual 20469 170.00EBRADFORD 10-00-3110-3115-001 PRIOR MOTOR VEHICLE LIC.FEE 01/25/2021 100.00 10.00Adj to actual 20468 292.00EBRADFORD 10-00-3900-3900-000 FUND BALANCE APPROPRIATION 01/25/2021 551,313.00 -4,401.00Adj per revenue actuals 20470 796,070.89EBRADFORD 10-00-9990-5300-000 CONTINGENCY 01/25/2021 250,000.00 -1,700.00To cover longer covid ads 20435 116,485.00EBRADFORD 01/25/2021 250,000.00 -16,100.00To cover bridge monitoring & bid prep 20452 100,385.00EBRADFORD 01/25/2021 250,000.00 -3,000.00To cover new museum contract 20457 97,385.00EBRADFORD 01/25/2021 250,000.00 -31,400.00To cover FY21 interim audit work 20459 65,985.00EBRADFORD 10-10-4000-5300-335 SUPPLIES - DISASTER 01/25/2021 44,365.00 -1,152.00Move video conf to IT budget 20462 26,178.00EBRADFORD 10-10-4100-5300-040 AUDITOR FEES 01/25/2021 75,500.00 31,400.00To cover FY21 interim audit work 20458 107,400.00EBRADFORD 10-10-4900-5300-120 ADVERTISING 01/25/2021 1,500.00 2,500.00To cover longer covid ads 20433 5,500.00EBRADFORD 01/25/2021 1,500.00 35.00To cover covid advertising 20442 5,535.00EBRADFORD 10-10-4900-5300-530 DUES & SUBSCRIPTIONS 01/25/2021 2,260.00 -35.00To cover covid advertising 20443 2,225.00EBRADFORD 10-10-4900-5300-570 MISCELLANEOUS 01/25/2021 2,500.00 -800.00To cover longer covid ads 20434 31,700.00EBRADFORD 10-10-6300-5300-080 TRAVEL AND TRAINING 01/25/2021 0.00 200.00To cover training 20475 1,400.00EBRADFORD 10-10-6300-5300-165 MAINTENANCE - INFRASTRUCTURE 01/25/2021 12,000.00 -200.00To cover training 20476 11,800.00EBRADFORD 01/25/2021 12,000.00 -3,500.00To cover Bellevue const admin 20479 8,300.00EBRADFORD 10-10-6610-5300-113 LICENSE FEES 01/25/2021 48,500.00 2,400.00To move video conf from Covid budget 20463 50,900.00EBRADFORD 10-30-5600-5300-360 UNIFORM RENTAL 01/25/2021 2,000.00 -383.00Adj to actual 20451 1,617.00EBRADFORD 10-30-5600-5300-455 C.S./ENGINEERING 01/25/2021 14,000.00 -2,067.00To cover overage 20437 24,784.25EBRADFORD 01/25/2021 14,000.00 16,100.00To cover bridge monitoring & bid prep 20453 40,884.25EBRADFORD 10-30-5600-5700-730 CAPITAL - INFRASTRUCTURE EBRADFORD 4:40:12PM01/19/2021 fl142r03 Page 1 of 2 GF- Revenue GF- Revenue GF- Revenue GF- Revenue GF- Revenue GF- Revenue GF- Revenue GF- Contingency Disaster Relief Governing Body Planning Planning Planning Public Space Public Space Info Services Streets Streets Streets BUDGET CHANGES REPORT TOWN OF HILLSBOROUGH FY 2020-2021 DATES: 01/25/2021 TO 01/25/2021 REFERENCE NUMBER DATE BUDGET CHANGE BUDGET ORIGINAL BUDGET AMENDEDCHANGE USER 01/25/2021 166,263.00 2,067.00To cover overage 20436 19,067.00EBRADFORD 01/25/2021 166,263.00 6,500.00To cover Kings St. pavement markings 20445 25,567.00EBRADFORD 01/25/2021 166,263.00 -5,531.00Adj to actual 20454 20,036.00EBRADFORD 10-30-5800-5300-320 SUPPLIES - OFFICE 01/25/2021 400.00 -61.00Adj to actual 20449 820.00EBRADFORD 10-30-5800-5300-330 DEPARTMENTAL SUPPLIES 01/25/2021 700.00 -32.00Adj to actual 20450 668.00EBRADFORD 10-30-5800-5300-360 UNIFORM RENTAL 01/25/2021 1,500.00 93.00Adj to actual 20448 1,593.00EBRADFORD 10-30-5800-5300-454 C.S./ROLLOUT CONTAINER 01/25/2021 9,300.00 -1,486.00Adj to actual 20455 7,814.00EBRADFORD 10-30-5800-5700-740 CAPITAL - VEHICLES 01/25/2021 310,000.00 -6,500.00To cover Kings St. pavement markings 20444 302,600.00EBRADFORD 01/25/2021 310,000.00 -5,212.00Adj to actual 20446 297,388.00EBRADFORD 10-60-6900-5300-150 MUSEUM MAINTENANCE 01/25/2021 10,000.00 3,000.00To cover new museum contract 20456 13,200.00EBRADFORD 10-70-3980-3980-001 DEBT ISSUANCE PROCEEDS 01/25/2021 310,000.00 -12,612.00Adj to actual 20447 297,388.00EBRADFORD 10-71-6300-5982-000 TRANSFER TO GEN CAP IMPROV FUND 01/25/2021 0.00 3,500.00To cover Bellevue const admin 20480 3,500.00EBRADFORD 30-80-7240-5300-338 SUPPLIES - DATA PROCESSING 01/25/2021 0.00 7.00To cover monitor 20461 252.00EBRADFORD 30-80-7240-5300-570 MISCELLANEOUS 01/25/2021 1,000.00 -7.00To cover monitor 20460 1,044.00EBRADFORD 30-80-8140-5300-330 SUPPLIES - DEPARTMENTAL 01/25/2021 100,000.00 -1,427.00To cover utility signs & stands 20438 98,573.00JDELLAVALL 30-80-8140-5300-331 SUPPLIES - SAFETY 01/25/2021 1,500.00 1,427.00To cover utility signs & stands 20439 2,927.00JDELLAVALL 30-80-8200-5300-330 SUPPLIES - DEPARTMENTAL 01/25/2021 60,000.00 -1,727.00To cover utility signs & stands 20440 58,253.00JDELLAVALL 30-80-8200-5300-331 SUPPLIES - SAFETY 01/25/2021 1,200.00 1,727.00To cover utility signs & stands 20441 2,927.00JDELLAVALL 60-03-3870-3870-000 TRANSFER FROM GF-CONNECTIVITY 01/25/2021 40,000.00 3,500.00To cover Bellevue const admin 20477 43,500.00EBRADFORD 60-03-6300-5700-730 CONNECTIVITY INFRASTRUCTURE 01/25/2021 40,000.00 3,500.00To cover Bellevue const admin 20478 43,500.00EBRADFORD -15,728.00 EBRADFORD 4:40:12PM01/19/2021 fl142r03 Page 2 of 2 Solid Waste Solid Waste Solid Waste Solid Waste Solid Waste Special Approp. GF- Revenue Public Space Billing & Collections Billing & Collections Water Distribution Water Distribution WW Collection WW Collection GF Capital Improv Fund GF Capital Improv Fund Board of Commissioners Agenda Abstract Form Meeting Date: _Jan. 25, 2021_______________ Department: __Finance_____________________ Public Hearing: Yes No Date of Public Hearing: __________________________ For Clerk’s Use Only AGENDA ITEM # 3.B Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Finance Director Daphna Schwartz ITEM TO BE CONSIDERED Subject: Proposed contract for year-end audit services in connection with the fiscal year ended June 30, 2021 Attachment(s): 1. Proposed FY21 contract for audit services submitted by Cherry Bekaert LLP Brief Summary: The attached contract is offered for approval to satisfy the town’s legal requirement to complete its annual financial statements and undergo an independent audit. Action Requested: Approve contract. ISSUE OVERVIEW Background Information & Issue Summary: The town is required, annually, to prepare financial statements and undergo an independent audit pursuant to state law. Financial Impacts: None; this expenditure is part of the annual budget. Staff Recommendations/Comments: Approve as proposed. CONTRACT TO AUDIT ACCOUNTS LGC-205 Rev. /2 The of and and for Primary Government Unit, together with DPCU (if applicable), hereinafter referred to as Governmental Unit(s) Auditor Name Auditor Address Hereinafter referred to as Auditor hereby agree as follows: Must be within four months of FYE 1. The Auditor shall audit all statements and disclosures required by U.S. generally accepted auditing standards (GAAS) and additional required legal statements and disclosures of all funds and/or divisions of the Governmental Unit(s). The non-major combining, and individual fund statements and schedules shall be subjected to the auditing procedures applied in the audit of the basic financial statements and an opinion shall be rendered in relation to (as applicable) the governmental activities, the business- type activities, the aggregate DPCUs, each major governmental and enterprise fund, and the aggregate remaining fund information (non-major government and enterprise funds, the internal service fund type, and the fiduciary fund types). 2. At a minimum, the Auditor shall conduct his/her audit and render his/her report in accordance with GAAS. The Auditor shall perform the audit in accordance with Government Auditing Standards if required by the State Single Audit Implementation Act, as codified in G.S. 159-34. If required by OMB Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and the State Single Audit Implementation Act, the Auditor shall perform a Single Audit. This audit and all associated audit documentation may be subject to review by Federal and State agencies in accordance with Federal and State laws, including the staffs of the Office of State Auditor (OSA) and the Local Government Commission (LGC). If the audit requires a federal single audit performed under the requirements found in Subpart F of the Uniform Guidance (§200.501), it is recommended that the Auditor and Governmental Unit(s) jointly agree, in advance of the execution of this contract, which party is responsible for submission of the audit and the accompanying data collection form to the Federal Audit Clearinghouse as required under the Uniform Guidance (§200.512). If the audit and Auditor communication are found in this review to be substandard, the results of the review may be forwarded to the North Carolina State Board of CPA Examiners (NC State Board). Page 1 Governing Board Primary Government UnitRUFKDUWHUKROGHU Discretely Presented Component Unit (DPCU) (if applicable) Fiscal Year Ending Audit Report Due Date Board of Commissioners Town of Hillsborough, North Carolina N/A Cherry Bekaert, LLP 3800 Glenwood Avenue, Suite 200, Raleigh, North Carolina 27612 06/30/21 10/31/21 CONTRACT TO AUDIT ACCOUNTS LGC-205 Rev. /20 If an entity is determined to be a component of another government as defined by the group audit standards, the entity’s auditor shall make a good faith effort to comply in a timely manner with the requests of the group auditor in accordance with AU-6 §600.41 - §600.42. This contract contemplates an unmodified opinion being rendered. If during the process of conducting the audit, the Auditor determines that it will not be possible to render an unmodified opinion on the financial statements of the unit, the Auditor shall contact the LGC 6taff to discuss the circumstances leading to that conclusion as soon as is practical and before the final report is issued. The audit shall include such tests of the accounting records and such other auditing procedures as are considered by the Auditor to be necessary inthe circumstances. Any limitations or restrictions in scope which would lead to a qualification should be fully explained in an attachment to this contract. If this audit engagement is subject to the standards for audit as defined in Government Auditing Standards, 201 revision, issued by the Comptroller General of the United States, then by accepting this engagement, the Auditor warrants that he/she has met the requirements for a peer review and continuing education as specified in Government Auditing Standards. The Auditor agrees to provide a copy of the most recent peer review report to the Governmental Unit(s) and the Secretary of the LGC prior to the execution of an audit contract. Subsequent submissions of the report are required only upon report expiration or upon auditor’s receipt of an updated peer review report. If the audit firm received a peer review rating other than pass, the Auditor shall not contract with the Governmental Unit(s) without first contacting the Secretary of the LGC for a peer review analysis that may result in additional contractual requirements. If the audit engagement is not subject to Government Accounting Standards or if financial statements are not prepared in accordance with U.S. generally accepted accounting principles (GAAP) and fail to include all disclosures required by GAAP, the Auditor shall provide an explanation as to why in an attachment to this contract or in an amendment. It is agreed that time is of the essence in this contract. All audits are to be performed and the report of audit submitted to LGC 6Waff within four months of fiscal year end. If it becomes necessary to amend this due date or the audit fee, an amended contract along with a written explanation of the delay shall be submitted to the Secretary of the LGC for approval. It is agreed that GAAS include a review of the Governmental Unit’s (Units’) systems of internal control and accounting as same relate to accountability of funds and adherence to budget and law requirements applicable thereto; that the Auditor shall make a written report, which may or may not be a part of the written report of audit, to the Governing Board setting forth his/her findings, together with his recommendations for improvement. That written report shall include all matters defined as “significant deficiencies and material weaknesses” in AU-C 265 of the AICPA Professional Standards (Clarified). The Auditor shall file a copy of that report with the Secretary of the LGC. All local government and public authority contracts for audit or audit-related work require the approvalof the Secretary of the LGC. This includes annual or special audits, agreed upon procedures related to internal controls, bookkeeping or other assistance necessary to prepare the Governmental Unit’s (Units’) records for audit, financial statement preparation, any finance-related investigations, or any other audit- related work in the State of North Carolina. Approval is not required on contracts and invoices for system improvements and similar services of a non-auditing nature. Invoices for services rendered under these contracts shall not be paid by the Governmental Unit(s)until the invoice has been approved by the Secretary of the LGC. (This also includes any progress billings.)[G.S. 159-34 and 115C-447] All invoices for Audit work shall be submitted in PDF format to the Secretary ofthe LGC for approval. The invoice marked ‘approved ’with approval date shall be returned to Page 2 CONTRACT TO AUDIT ACCOUNTS LGC-205 Rev. /20 the Auditor to present to the Governmental Unit(s) for payment. This SDUDJUDSK is not applicable to contracts for audits of hospitals. In consideration of the satisfactory performance of the provisions of this contract, the Governmental Unit(s) shall pay to the Auditor, upon approval by the Secretary of the LGC if required, the fee, which includes any costs the Auditor may incur from work paper or peer reviews or any other quality assurance program required by third parties (federal and state grantor and oversight agencies or other organizations) as required under the Federal and State Single Audit Acts. This does not include fees for any pre-issuance reviews that may be required by the NC Association of CPAs (NCACPA) Peer Review Committee or NC State Board of CPA Examiners (see Item 13). If the Governmental Unit(s) has/have outstanding revenue bonds, the Auditor shall submit to LGC 6taff, either in the notes to the audited financial statements or as a separate report, a calculation demonstrating compliance with the revenue bond rate covenant. Additionally, the Auditor shall submit to LGC 6taff simultaneously with the Governmental Unit’s (Units’) audited financial statements any other bond compliance statements or additional reports required by the authorizing bond documents, unless otherwise specified in the bond documents. After completing the audit, the Auditor shall submit to the Governing Board a written report of audit.This report shall include, but not be limited to, the following information: (a) Management’s Discussion andAnalysis, (b) the financial statements and notes of the Governmental Unit(s) and all of its component unitsprepared in accordance with GAAP, (c) supplementary information requested by the Governmental Unit(s) orrequired for full disclosure under the law, and (d) the Auditor’s opinion on the material presented. The Auditorshall furnish the required number of copies of the report of audit to the Governing Board upon completion. If the audit firm is required by the NC State Board, the NCACPA Peer Review Committee, or the Secretary of the LGC to have a pre-issuance review of its audit work, there shall be a statement in the engagement letter indicating the pre-issuance review requirement. There also shall be a statement that the Governmental Unit(s) shall not be billed for the pre-issuance review. The pre-issuance review shall be performed prior to the completed audit being submitted to LGC Staff. The pre-issuance review report shall accompany the audit report upon submission to LGC Staff. The Auditor shall submit the report of audit in PDF format to LGC Staff. For audits of units other than hospitals, the audit report should be submitted when (or prior to) submitting the final invoice for services rendered. The report of audit, as filed with the Secretary of the LGC, becomes a matter of public record for inspection, review and copy in the offices of the LGC by any interested parties. Any subsequent revisions to these reports shall be sent to the Secretary of the LGC along with an Audit Report Reissued Form (availableon the Department of State Treasurer website). These audited financial statements, excluding the Auditors’opinion, may be used in the preparation of official statements for debt offerings by municipal bond ratingservices to fulfill secondary market disclosure requirements of the Securities and Exchange Commission andfor other lawful purposes of the Governmental Unit(s) without requiring consent of the Auditor. If the LGC Staffdetermines that corrections need to be made to the Governmental Unit’s (Units’) financial statements, thosecorrections shall be provided within three business days of notification unless another deadline is agreed to byLGC 6taff. Should circumstances disclosed by the audit call for a more detailed investigation by the Auditor than necessary under ordinary circumstances, the Auditor shall inform the Governing Board in writing of the need for such additional investigation and the additional compensation required therefore. Upon approval by the Page 3 CONTRACT TO AUDIT ACCOUNTS LGC-205 Rev. /20 Secretary of the LGC, this contract may be modified or amended to include the increased time, compensation, or both as may be agreed upon by the Governing Board and the Auditor. If an approved contract needs to be modified or amended for any reason, the change shall be made in writingDQGpre-audited if the change includes a change in audit fee(pre-audit requirement does not apply to charter schools or hospitals). This amended contract shall becompleted in full, including a written explanation of the change, signed and dated by all original parties to thecontract. It shall then be submitted to the Secretary of the LGC for approval. No change to the audit contractshall be effective unless approved by the Secretary of the LGC, the Governing Board, and the Auditor. A copy of the engagement letter, issued by the Auditor and signed by both the Auditor and the Governmental Unit(s), shall be attached to this contract, and except for fees, work, and terms not related to audit services, shall be incorporated by reference as if fully set forth herein as part of this contract. In case of conflict between the terms of the engagement letter and the terms of this contract, the terms of this contract shall take precedence. Engagement letter terms that conflict with the contract are deemed to be void unless the conflicting terms of this contract are specifically deleted in Item 28 of this contract. Engagement letters containing indemnification clauses shall not be accepted by LGC Staff. Special provisions should be limited. Please list any special provisions in an attachment. A separate contract should not be made for each division to be audited or report to be submitted. If a DPCU is subject to the audit requirements detailed in the Local Government Budget and Fiscal Control Act and a separate audit report is issued, a separate audit contract is required. If a separate report is not to be issued and the DPCU is included in the primary government audit, the DPCU shall be named along with the pULPDU\ government on this audit contract. DPCU Board approval date, signatures from the DPCU Board chairman and finance officer also shall be included on this contract. The contract shall be executed, pre-audited (pre-audit requirement does not apply to charter schoolsor hospitals), and physically signed by all parties including Governmental Unit(s) and the Auditor, thensubmitted in PDF format to the Secretary of the LGC. The contract is not valid until it is approved by the Secretary of the LGC. The staff of the LGC shall notify the Governmental Unit and Auditor of contract approval by email. The audit should not be started before the contract is approved. Retention of Client Records: Auditors are subject to the NC State Board of CPA Examiners’ Retention of Client Records Rule 21 NCAC 08N .0305 as it relates to the provision of audit and other attest services, as well as non-attest services. Clients and former clients should be familiar with the requirements of this rule prior to requesting the return of records. This contract may be terminated at any time by mutual consent and agreement of the Governmental Unit(s) and the Auditor, provided that (a) the consent to terminate is in writing and signed by both parties, (b) the parties have agreed on the fee amount which shall be paid to the Auditor (if applicable), and (c) no termination shall be effective until approved in writing by the Secretary of the LGC. The Governmental Unit’s (Units’) failure or forbearance to enforce, or waiver of, any right or an event of breach or default on one occasion or instance shall not constitute the waiver of such right, breach or default on any subsequent occasion or instance. There are no other agreements between the parties hereto and no other agreements relative hereto that shall be enforceable unless entered into in accordance with the procedure set out herein and approved by the Secretary of the LGC. Page 4 CONTRACT TO AUDIT ACCOUNTS LGC-205 Rev. /20 E-Verify. Auditor shall comply with the requirements of NCGS Chapter 64 Article 2. Further, if Auditor utilizes any subcontractor(s), Auditor shall require such subcontractor(s) to comply with the requirements of NCGS Chapter 64, Article 2. $SSOLFDEOHWRDXGLWVZLWKILVFDO\HDUHQGVRI-XQHDQGODWHU)or all non-attest services, the Auditor shall adhere to the independence rules of the AICPAProfessional Code of Conduct and Governmental Auditing Standards, 2018 Revision (as applicable).Financial statement preparation assistance shall be deemed a “significant threat” requiring the Auditor toapply safeguards sufficient to reduce the threat to an acceptable level. If the Auditor cannot reduce thethreats to an acceptable level, the Auditor cannot complete the audit. If the Auditor is able to reduce thethreats to an acceptable level, the documentation of this determination, including the safeguards applied,must be included in the audit workpapers. All non-attest service(s) being performed by the Auditor that are necessary to perform the audit must be identified and included in this contract. The Governmental Unit shall designate an individual with the suitable skills, knowledge, and/or experience (SKE) necessary to oversee the services and accept responsibility for the results of the services performed. If the Auditor is able to identify an individual with the appropriate SKE, s/he must document and include in the audit workpapers how he/she reached that conclusion. If the Auditor determines that an individual with the appropriate SKE cannot be identified, the Auditor cannot perform both the non-attest service(s) and the audit. See "Fees for Audit Services" page of this contract to disclose the person identified as having the appropriate SKE for the Governmental Unit. Page 5 $SSOLFDEOHWRDXGLWVZLWKILVFDO\HDUHQGVRI-XQHDQGODWHU7KHDXGLWRUVKDOOSUHVHQWWKH DXGLWHGILQDQFLDOVWDWHPHQWVLQFOXGLQJDQ\FRPSOLDQFHUHSRUWVWRWKHJRYHUQPHQWXQLW¶VJRYHUQLQJERG\RU DXGLWFRPPLWWHHLQDQRIILFLDOPHHWLQJLQRSHQVHVVLRQDVVRRQDVWKHDXGLWHGILQDQFLDOVWDWHPHQWVDUH DYDLODEOHEXWQRWODWHUWKDQGD\VDIWHUWKHVXEPLVVLRQRIWKHDXGLWUHSRUWWRWKH6HFUHWDU\7KHDXGLWRU¶V SUHVHQWDWLRQWRWKHJRYHUQPHQWXQLW¶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³5HVSRQVHWRWKH $XGLWRU¶V)LQGLQJV5HFRPPHQGDWLRQVDQG)LVFDO0DWWHUV´LIUHTXLUHGXQGHU1&$& ,QIRUPDWLRQEDVHGRQWKHDXGLWHGILQDQFLDOVWDWHPHQWVVKDOOEHVXEPLWWHGWRWKH6HFUHWDU\IRUWKHSXUSRVH RILGHQWLI\LQJ)LQDQFLDO3HUIRUPDQFH,QGLFDWRUVDQG)LQDQFLDO3HUIRUPDQFH,QGLFDWRUVRI&RQFHUQ CONTRACT TO AUDIT ACCOUNTS LGC-205 Rev. /20 $SSOLFDEOHWRFKDUWHUVFKRROFRQWUDFWVRQO\1RLQGHEWHGQHVVRIDQ\NLQGLQFXUUHGRUFUHDWHGE\WKH FKDUWHUVFKRROVKDOOFRQVWLWXWHDQLQGHEWHGQHVVRIWKH6WDWHRULWVSROLWLFDOVXEGLYLVLRQVDQGQRLQGHEWHGQHVV RIWKHFKDUWHUVFKRROVKDOOLQYROYHRUEHVHFXUHGE\WKHIDLWKFUHGLWRUWD[LQJSRZHURIWKH6WDWHRULWV SROLWLFDOVXEGLYLVLRQV $OORIWKHDERYHSDUDJUDSKVDUHXQGHUVWRRGDQGVKDOODSSO\WRWKLVFRQWUDFWH[FHSWWKHIROORZLQJ QXPEHUHGSDUDJUDSKVVKDOOEHGHOHWHG6HH,WHPIRUFODULILFDWLRQ The process for submitting contracts, audit reports and invoices is subject to change. Auditors and units should use the submission process and instructions in effect at the time of submission. Refer to the N.C. Department of State Treasurer website at KWWSVZZZQFWUHDVXUHUFRPVWDWHDQGORFDOJRYHUQPHQW ILQDQFHGLYLVLRQORFDOJRYHUQPHQWFRPPLVVLRQVXEPLWWLQJ\RXUDXGLW $OOFRPPXQLFDWLRQVUHJDUGLQJDXGLWFRQWUDFWUHTXHVWVIRUPRGLILFDWLRQRURIILFLDODSSURYDOVZLOOEHVHQW WRWKHHPDLODGGUHVVHVSURYLGHGRQWKHVLJQDWXUHSDJHVWKDWIROORZ 0RGLILFDWLRQVWRWKHODQJXDJHDQGWHUPVFRQWDLQHGLQWKLVFRQWUDFWIRUP/*&DUHQRWDOORZHG Page CONTRACT TO AUDIT ACCOUNTS LGC-205 Rev. /20 FEES FOR AUDIT SERVICES 1. For all non-attest services, the Auditor shall adhere to the independence rules of the AICPA Professional Code of Conduct (as applicable) and Governmental Auditing Standards,2018 Revision. Refer to Item 2 of this contract for specific requirements. The following information must be provided by the Auditor; contracts presented to the LGC without Whis information will be not be approved. Financial statements were prepared by: Auditor Governmental Unit Third Party If applicable: Individual at Governmental Unit designated to have the suitable skills, knowledge, and/or experience (SKE) necessary to oversee the non-attest services and accept responsibility for the results of these services: Name: TitleDQG8QLW&RPSDQ\: Email Address: Fees may not be included in this contract for work performed on Annual Financial Information Reports (AFIRs), Form 990s, or other services not associated with audit fees and costs. Such fees may be included in the engagement letter but may not be included in this contract or in any invoices requiring approval of the LGC. See Items 8DQG for details on other allowable and excluded fees. Prior to submission of the completed audited financial report, applicable compliance reports and DPHQGHG FRQWUDFW(if required) the Auditor may submit invoices for approval for services rendered, not to exceed 75% of the billingsIRUWKHODVWDQQXDODXGLWRIWKHXQLWVXEPLWWHGWRWKH6HFUHWDU\RIWKH/*&Should the75% cap provided belowconflict with the cap calculated by LGC 6taff based onthebillings on filewith theLGC, the LGCcalculation prevails. All invoices for services rendered in an auditengagement asdefined in20 NCAC.0503 shall be submitted to the Commission for approval before anypayment is made.Payment beforeapproval is a violation of law. (This SDUDJUDSK not applicable to contractsand invoicesassociated with auditsofhospitals). PRIMARY GOVERNMENT FEES Primary Government Unit Audit Fee $ Additional Fees Not Included in Audit Fee: Fee per Major Program $ Writing Financial Statements $ All Other Non-Attest Services $ 75% Cap for Interim Invoice Approval (not applicable to hospital contracts) $ DPCU FEES (if applicable) Discretely Presented Component Unit Audit Fee $ Additional Fees Not Included in Audit Fee: Fee per Major Program $ Writing Financial Statements $ All Other Non-Attest Services $ 75% Cap for Interim Invoice Approval (not applicable to hospital contracts) $ Page 251RW$SSOLFDEOH ,GHQWLILFDWLRQRI6.(,QGLYLGXDOQRWDSSOLFDEOHIRU*$$6RQO\DXGLWRUDXGLWVZLWK)<(VSULRUWR-XQH ✔ Daphna Schwartz Finance Director daphna.schwartz@hillsboroughnc.gov Town of Hillsborough, North Carolina 31,400 3,000 N/A N/A 22,875.00 N/A N/A N/A N/A N/A LGC-205 CONTRACT TO AUDIT ACCOUNTS Rev. Page SIGNATURE PAGE AUDIT FIRM Audit Firm Authorized Firm Representative (typed or printed) Signature Date Email Address GOVERNMENTAL UNIT Governmental Unit Date Primary Government Unit Governing Board Approved Audit Contract (G.S.59-34(a) or G.S.115C-447(a)) Mayor/Chairperson (typed or printed) Signature Date Email Address Chair of Audit Committee (typed or printed, or “NA”) Signature Date Email Address GOVERNMENTAL UNIT – PRE-AUDIT CERTIFICAT( Required by G.S. 159-28(a1) or G.S. 115C-441(a1) 1RWDSSOLFDEOHWRKRVSLWDOFRQWUDFWV This instrument has been pre-audited in the manner required by The Local Government Budget and Fiscal Control Act or by the School Budget and Fiscal Control Act. Primary Governmental Unit Finance Officer (typed or printed)Signature Date of Pre-Audit Certificate Email Address Cherry Bekaert, LLP April Adams AAdams@cbh.com Town of Hillsborough, North Carolina 1-8-2021 LGC-205 CONTRACT TO AUDIT ACCOUNTS Rev./20 Page SIGNATURE PAGE – DPCU (complete only if applicable) DISCRETELY PRESENTED COMPONENT UNIT DPCU Date DPCU Governing Board Approved Audit Contract (Ref: G.S. 159-34(a) or G.S. 115C-447(a)) '3&8Chairperson (typed or printed) Signature Date Email Address Chair of Audit Committee (typed or printed, or “NA”) Signature Date Email Address DPCU – PRE-AUDIT CERTIFICATE Required by G.S. 159-28(a1) or G.S. 115C-441(a1 1RWDSSOLFDEOHWRKRVSLWDOFRQWUDFWV This instrument has been pre-audited in the manner required by The Local Government Budget and Fiscal Control Act or by the School Budget and Fiscal Control Act. '3&8 Finance Officer (typed or printed) Signature Date of Pre-Audit Certificate Email Address 5HPHPEHUWRSULQWWKLVIRUPDQGREWDLQDOO UHTXLUHGVLJQDWXUHVSULRUWRVXEPLVVLRQ N/A N/A N/A PRINT Board of Commissioners Agenda Abstract Form Meeting Date: Jan. 25, 2021 Department: Administration Public Hearing: Yes No Date of Public Hearing: For Clerk’s Use Only AGENDA ITEM # 4 Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Town Manager Eric Peterson & Assistant to Manager Jen Della Valle ITEM TO BE CONSIDERED Subject: FY2022-24 Budget Check-In Attachment(s): 1. Presentation Slides 2. Draft Strategic Objectives 3. Types of Plans 4. Diagram Outlining Relationship Between Plans 5. Budget Proposal Handout Brief Summary: With the FY22 budget process beginning soon, staff wants to check in with the board on various topics that will help us move forward with budget and strategy development. Action Requested: Provide feedback. ISSUE OVERVIEW Background Information & Issue Summary: Part 1 – Strategic Plan In early 2020, the town began developing its first strategic plan, with the board updating the strategy map: reaffirming the town’s vision and mission statements, agreeing upon values, and approving five focus areas for the town’s strategic plan – 1) sustainability & resiliency, 2) connected community, 3) economic vitality, 4) community safety, and 5) service excellence. Further work on the strategic plan was delayed until this fiscal year as the town shifted to pandemic response. Each focus area had a list of bullet points that helped define it. Over the last couple of months, budget staff developed draft strategic objectives from these bullet points (see attachment). A lot has happened nationally and globally since last spring (i.e. climate, COVID-19, race and equity, etc.). It will be helpful for the board to review the five focus areas and confirm that these are still the board’s priorities and weigh in on the draft strategic plan objectives. Once the board provides any updates, changes, and/or confirmation, staff will be able to use this information to 1) further work on the strategic plan, and 2) develop the FY22-24 budget/financial plan. The next step for the budget team will be to convene work groups to develop action plans for each of the focus areas and then present them to the board for feedback at the budget retreat(s). While it would be nice if the strategic plan can be finalized by budget adoption in June, additional time may be needed to complete the plan. The town is undertaking both strategic planning and comprehensive planning efforts simultaneously. While both plans serve different purposes, they both play pivotal roles for the organization and the community and thus, the budget. The “Types of Plans” attachment provides a quick overview on the key differences between the planning efforts and the attached diagram illustrates how the various plans are used in relation to the budget process and how they work together to produce outcomes for the community. Part 2 – FY22-24 Budget Approach a. Consider, discuss, and deliberate recommendation from the town manager on how to approach development of the upcoming budget & financial plan (presented in Budget Proposal Handout attached). b. Identify key topics, decision points, information/updates/reports for presentation, and anything else the board may wish to have included on the agenda for the FY22-24 retreat(s). Part 3 – Retreat Logistics • What topics would the town board like to discuss at the retreat beyond the strategy map and development of the action plan or outcomes? As a reminder, a preliminary version of the budget will not be available, nor will a list of proposed projects as those will be refined over the next few months. Staff needs time to get clarity on the strategic direction from the board and take the next several months doing our best to prepare a plan that best addresses those desires, given available resources. • Day(s) – It would be helpful to plan for two dates. If we are swift and don’t need the second date, then we can cancel. Since the retreat will have to be done remotely, the board may want to consider formats different than the traditional six hours on a Saturday since the Zoom format can be more fatiguing than being in-person. Doing multiple shorter Zoom meetings is worth consideration. Some dates that work for staff are March 9, 10, 11, 15 or 16. • Time – Since we are proposing weekday options, we may want to set a cap for how late to go, such as 9 p.m. so we can stay focused during these important conversations. • Facilitator – Staff would like to consider not having an outside facilitator this year due to the virtual format and change in focus (primarily strategic planning). Instead, staff would facilitate the retreat. • Other? Financial Impacts: None Staff Recommendations/Comments: N/A Town of Hillsborough Strategic Plan FY22-FY24 Background Strategic Plan Structure •Cascade Approach •Vision •Mission •Values •Focus Area •Strategic Objective •Performance Measure •Initiatives Phase 1 -Strategic Plan •Cascade Approach •Vision •Mission •Values •Focus Areas •Strategic Objective •Performance Measure •InitiativesSpring 2020 Phase 2 -Strategic Plan •Cascade Approach •Vision •Mission •Values •Focus Areas •Strategic Objectives •Performance Measures •Initiatives Spring 2021 *Draft* Strategic Objectives Sustainability & Resiliency Connected Community Economic Vitality Community Safety Service Excellence Optimize the built environment in a way that is respectful of the natural environment and promotes human health. Intensify efforts to meet 2030 and 2050 clean energy goals, reducing overall energy consumption and increasing the use of clean energy for town operations. Reinforce resiliency in town operations by implementing emergency preparedness strategies. Protect and enhance natural resources. Enhance bike and pedestrian connectivity that links Hillsborough residents through publicly accessible spaces Foster reliable, high-speed internet services throughout the community. Minimize cost of government. Make it easier for businesses to get established and thrive. Improve the availability and choice of quality housing that is affordable to a broad range of income levels. Maintain a healthy balance between the residential and commercial property tax base. Ensure that people are safe and feel safe in all parts of town. Maintain a clean community. Maintain and protect assets and infrastructure to drive reliability, cost effectiveness, and efficiency. Provide quality municipal services through operational excellence and a culture of innovation. Attract, retain, and develop a diverse and competitive workforce to meet the needs of the community now and in the future. Focus Areas Presented Spring 2020 Connected Community Community Safety Sustainability & Resiliency Economic Vitality Service Excellence • Take care of our infrastructure, assets & personnel. • Excel in service delivery by continuously improving. • Ensure that people are safe and feel safe in all parts of town. • Maintain a clean community. • Connect our community o Physically o Virtually o Socially • Minimize cost of government. • Encourage consistency in business practices. • Promote diversity in housing options. • Maintain balance of residential and commercial base. • Optimize the built environment. • Reduce energy consumption and increase clean energy use. • Reinforce resiliency in town operations. • Protect our natural resources. Draft Strategic Objectives Connected Community 1. Enhance bike and pedestrian connectivity that links Hillsborough residents through publicly accessible spaces. 2. Foster reliable, high-speed internet services throughout the community. Community Safety 1. Ensure that people are safe and feel safe in all parts of town. 2. Maintain a clean community. Sustainability & Resiliency 1. Optimize the built environment in a way that is respectful of the natural environment and promotes human health. 2. Intensify efforts to meet 2030 and 2050 clean energy goals, reducing overall energy consumption and increasing the use of clean energy for town operations. 3. Reinforce resiliency in town operations by implementing emergency preparedness strategies. 4. Protect and enhance natural resources. Economic Vitality 1. Minimize cost of government. 2. Make it easier for businesses to get established and thrive. 3. Improve the availability and choice of quality housing that is affordable to a broad range of income levels. 4. Maintain a healthy balance between the residential and commercial property tax base. Service Excellence 1. Maintain and protect assets and infrastructure to drive reliability, cost effectiveness, and efficiency. 2. Provide quality municipal services through operational excellence and a culture of innovation. 3. Attract, retain, and develop a diverse and competitive workforce to meet the needs of the community now and in the future. TYPES OF PLANS Vision Statement: Describes the desired future state of the town Mission Statement: Describes the purpose of the organization, is informed by the Vision statement and expresses how the vision will be achieved Strategic Plans: Expresses high-level goals for the organization over the next 3-5 years and takes into account how to measure the outcomes and what projects to take on to meet the goals. Serves as the town organization’s roadmap and is used to prioritize resources, goals, and departmental objectives. Informed by vision and mission statements. Often includes values or value statement. In Hillsborough, our strategic plan would be three years to match our current three- year budget/financial plan since they work in tandem. • Employs strategic thinking • Expresses clear purpose/mission • Provides guiding principles that represent shared values and standards of conduct • Includes implementation plan with measurables actions, performance indicators and key assignments • Routinely referenced by organization and used to track and report progress • Informs the annual budget • May or may not include public participation Comprehensive Plan: (sometimes called Master Plan): Presents a vision for the future with long-range goals and objectives for all activities that affect local government. Broad in scope and usually a 10-20 year range. (Updated every 5-10 years) • Statutorily required • 10-20-year timeframe • Exist as framework to be filled in as private investment and public capital allow • Set context for public and private development and land use • Guides zoning, annexation, land use, and transportation decisions and identifies needs for regulations and ordinance amendments • Sets principles against which development proposals are reviewed so decisions are made “comprehensively” • Land use/zoning components are amended as needed • TOH plan will include sustainability as guiding principle and have climate action and resiliency components • Existing plans that will be incorporated: 1. Vision 2030 Plan 2. Strategic Growth Plan 3. Future Land Use Plan/Map 4. Parks and Recreation Master Plan 5. Community Connectivity Plan 6. Churton Street Corridor Strategic Plan 7. U.S. 70/Cornelius Street Corridor Plan • Regulatory documents that will be correlated: 1. Unified Development Ordinance 2. Zoning Map • Informs Unified Development Ordinance and capital projects • May inform Strategic Growth Plan • Must include public participation Operational Plan (sometimes called Action Plan or Work Plan): Highly detailed outline of what a department/division will focus on in the near future, usually 1-2-year timeframe. Can come in a variety of formats, including monthly and weekly tasks. Relationship: Plans, Budget, & Results Budget, Financial Plan, & CIP Departmental Plans Strategic Plan Comprehensive Plan Service to the Community FY22-24 Budget/Financial Plan Approach for Development Town Manager Recommendations January 25, 2021 - Town Board Workshop Development of the budget is guided by the strategy map, action plan items and other initiatives that work to make progress in the five focus areas. In addition, the manager recommends using the four priorities listed below in rank order to guide development of the FY22-24 Budget & Financial Plan (target date for presentation to the town board is May 10). The manager is requesting feedback and direction on whether this approach is in line with board goals and assessment of current conditions, or do adjustments need to be made? 1. Daily operations and core service delivery. This includes the town’s approach of “taking care of what we have.” 2. Backlogged needs. Develop options to address long-standing issues related to infrastructure, equipment, buildings, systems, and recruiting/retaining employee talent before the Comprehensive Plan is completed (i.e., solve these problems now so we will be better able to focus on implementing Comprehensive Plan priorities in 18+ months). These priorities are General Fund focused, although talent retention, ERP, and fiber costs are shared amongst all funds: o Employment recruitment and retention issue addressed by bringing dependent health insurance benefits closer to what’s offered by surrounding local governments. o Public Works – relocate to NC86 North or other solution that gets the department out of the flood plain, out of “the shed,” and provides reasonable cover/storage for vehicles, equipment, and materials. Feasibility studies and options have been developed, as well as funding available to start design. o Fire Station - Relocate to N. Churton Street property. This project addresses at least three key needs: 1) moves ORFD from vastly outdated to a modern facility, 2) location improves coverage to Orange Rural and Hillsborough services areas, complimenting the new southern Waterstone station (built and paid for by ORFD), and 3) creating an economic development opportunity for the downtown station property. o ERP System – replace old accounting/finance/payroll programs that are a major frustration for staff. o Fiber – connect/link most or all town facilities. 3. Other. What other items, needs, opportunities should compete for funding and/or take precedence? These will emerge throughout the budget process from the board, staff and employees, advisory boards, and the public. If there are items/issues that should be considered to take precedence over the unfunded needs listed above, hearing about them as soon as possible will be helpful. 4. Comprehensive Plan. This process is in motion. Thought needs to be given on how to determine which Comprehensive Plan’s priorities will be integrated into strategy map, strategic plan, recommended funding in the three-year financial plan, seven-year CIP, and ultimately annual budget for implementation. How to Pay for it and/or Stretch Our Dollars?  Revenue from new growth only covers a fraction of these costs. In addition, growth is not infinite and can slow/stop quickly, as we’ve experienced in the past. Prioritization, waste elimination (dollars and time), using “bridges and band-aids” to creatively address needs until long-term solutions can be implemented, as well as thoughtful financial planning are essential.  Personnel. Not filling some current and future vacancies, looking for restructuring opportunities to streamline while gaining efficiencies/effectiveness, better leverage existing employee talent, contract out services/tasks to reduce costs or delay adding FTE’s, limit new FTE’s, as well as considering service reductions are essential.  Constraints spur innovation and prioritization. Attempt to develop a plan that addresses the five backlogged needs with no increase to the property tax rate. Reserve consideration of a tax rate increase to fund Comprehensive Plan priorities. These limitations encourage exploration of options and generate the creative thinking and prioritization necessary if we are to be successful. If it’s deemed a property tax increase is necessary in the future, it is easier to explain and justify everyone clearly understands what is being added and why (e.g., projects, services, facilities, etc.). This can be in the form of major projects the public can voice their support, opposition, or other opinions on, including voting via a General Obligation Bond Referendum.  Consider opportunity costs (i.e., what we are giving up by funding an item). This may help us address the on- going challenge of smaller issues crowding out the ability to pay for the bigger needs that continue to go unfunded. In isolation most new requests and proposals look good and have reasonable justifications. Making a habit of comparing new requests, as well as on-going expenses, to unfunded priorities adds critical context to the decision-making process. If a request to add an FTE would pay for 30% of the annual funding for moving public works or the fire station, then a thorough evaluation and deliberation should take place.  New funding approaches. Staff has a few ideas that may help facilitate paying for unfunded priorities. Alone, these are not enough to move these projects forward, but in combination with other approaches may provide more options. Water & Sewer Fund and Stormwater Fund Priorities There is no shortage of priorities in the two enterprise funds. Staff needs additional time for evaluation, studies to be completed, further options developed, as well as guidance from the Water & Sewer Advisory Committee. Board direction will be critical for these operations during the May and June budget workshops.